BLOG: Alternate state reality: a critical look at the transition to a digital economy

At the beginning of 2018, it was big news when the Cabinet of Ministers of Ukraine approved the Concept for Development of Digital Economy and Society of Ukraine for 2018-2020 and an action plan for its implementation. Such terms as a blockade, digital workplace, artificial intelligence, etc., were added to the language of regulatory documents. It seemed that the state finally recognized the need for fundamental changes and a critical need for a technological leap. But are the declarations enough to do this?

There is a great joke for a bureaucratic society: “If you want an issue to last forever – gather a task force.” The concept, which was acclaimed by the Ukrainians, is now nothing more than a list of terms, and the action plan consists of merely planned research and projects. Everything here depends on how you look at it: one can say that we need to start with something, and another can warn that interesting offers are at risk to remain on paper. Personally, I think it is necessary to deal with the Concept and rationally assess how realistic its promises are.

The Concept promises us an accelerated scenario of digital development. In just two years, the state plans to significantly reduce the digital gap, i.e., to provide broad segments of the population with access to high-speed Internet, to increase the innovation technology literacy of the population and to radically change the situation using innovative technologies in business.

Furthermore, the government expects the digital economy to increase GDP by 5% a year, and the country will have a large number of new jobs. It is still unclear what exactly supports these expectations, but there are no grounds for not believing them either. However, I believe it is necessary to understand the fact that the state should not and can not set the benchmarks for the digital economy development. It can create conditions, support new projects, develop infrastructure, but in no case can it be the industry locomotive and try to develop it by managing from the center.

The success of digital economy in the world is a result of innovations developed by both the business and researchers, and not the product of regulatory authorities. In no way am I trying to diminish the role of state at all. On the contrary, I suggest making it an important participant in modernization. The conditions are really needed, but the formation of the agenda depends on other parties (entrepreneurs, scientists, investors).

It has long become common to quote this example, but the thing is it is still relevant: it is extremely difficult to make a leap from ruined roads to logistics using drones, from ravaged hospitals to telemedicine, from pressing the IT-business by law enforcement agencies to the investors- innovators inflow. It being difficult does not mean it is impossible. However, this requires a decisive change in the entire paradigm.

There is no point in counting on a partnership between the state and business when business is literally surviving. Therefore, the main barrier to the transition to the digital economy is, in my opinion, its isolation from deeper processes of social reform, as well as insufficient complexity, even in the sphere of innovative technologies. For instance, despite intensive work in one direction, the state has not yet changed the attitude towards cryptocurrency.

Another issue concerns jobs. The Concept suggests digital transition for school education, development of basic and professional skills of the population, but neglects the question of reprofiling of many citizens who risk losing their jobs due to the introduction of advanced technologies. It is clear that in the long term the situation will normalize, but now, without a detailed strategy, it can provoke a rise in social tension, which will also not be a positive factor for digital development.

However, I’m not a pessimist. Digital economy in Ukraine will develop for real. Here, I agree with the government that there are all factors for this. We already have interesting projects and experts from Ukraine successfully working in foreign companies, competing in the global world of skills and knowledge. It is vitally crucial for us to harmonize regulatory documents to better regulate the industry. It seems to me that the state will handle this task well. Surely, I believe that equipping the most remote regions of the country with the Internet will positively influence the digital technology development, as well as create new areas and mechanisms for interaction with the population. I am also sure that the development of blockchain solutions can greatly improve the situation in many areas, and the creation and implementation of software is a well-understood program that may be implemented by 2020.

What we should not expect is Ukraine turning into a large Silicon Valley in several years. This leap will only allow us to create a base from which innovative products must emerge. In other words, a digital economy must be a goal, not a dream, which means a realistic and critical view, ability to adapt to changes and rejection of unreasonable expectations. To get into the future, we need to act, not dream, plan in detail, and not proclaim mottos. Only then will we be able to reach a qualitatively new level.